ifo President Fuest Welcomes Scholz and Altmaier’s Economic Package
Clemens Fuest, President of the ifo Institute, has welcomed the package of measures presented by German Finance Minister Olaf Scholz and Economics Minister Peter Altmaier. “The measures point in the right direction. They build on our experience of the 2008 financial crisis, but are adapted to the special circumstances of the current crisis. The focus on liquidity support does justice to this,” Fuest said in Munich on Friday.
“Politicians face the challenge that in this crisis, conventional economic stimulus programs to support the economy are not working,” Fuest added. “To contain the crisis, we must reduce ‘social consumption,’ i.e., economic activities that bring people together such that they might become infected. In addition, the interruption of value chains is also leading to supply disruptions. This means a general demand stimulus package is not appropriate.”
Fuest stated: “What is needed instead is a temporary freeze of economic activity – but economic policy must prevent this freeze from causing permanent damage. It must also prevent negative expectations from spreading to other economic sectors. The package of measures announced focuses on supporting affected companies and their employees during this freeze. Expressly not limiting the aid is the right signal to send in order to stabilize expectations.”
